A prov­ince of vast op­por­tu­nity

To many peo­ple, the North­ern Cape is just a place we drive through on our way to the coun­try’s beaches. But did you know that our largest prov­ince, and the least pop­u­lated, pro­duces 80% of the coun­try’s raisins, and has the largest min­eral re­sources and r

CityPress - - Business -

The North­ern Cape takes up nearly a third of South Africa’s land area. It may make the small­est con­tri­bu­tion to the coun­try’s econ­omy and have the low­est pop­u­la­tion den­sity, but, within th­ese num­bers, the In­dus­trial De­vel­op­ment Cor­po­ra­tion (IDC) still sees tremen­dous op­por­tu­nity in this prov­ince.

A wealth of opportunities

The North­ern Cape, with its stark beauty, nat­u­ral re­sources and the mighty Or­ange River, of­fers many unique opportunities, such as ad­ven­ture and ac­tiv­ity-based tourism that beck­ons to be de­vel­oped. The prov­ince has sev­eral na­tional parks, of which the Kgala­gadi Trans­fron­tier Park is the sec­ond largest in the coun­try.

The game view­ing and tro­phy hunt­ing in­dus­tries are ex­pe­ri­enc­ing marked growth and cre­ate more than 9 000 jobs in the prov­ince.

In line with the re­gion’s eco­nomic ac­tiv­ity, 34% of our cur­rent port­fo­lio is ded­i­cated to the min­ing sec­tor. We have many mines in this prov­ince, which we can lever­age to strengthen and lo­calise the min­ing sup­plier in­dus­try.

Johannesburg started out as min­ing town and is now one of the big­gest busi­ness hubs on the con­ti­nent. There is no rea­son our prov­ince can­not em­u­late that.

We are ex­cited about the fu­ture prospects for the Gams­berg zinc mine, which is be­ing de­vel­oped in con­junc­tion with Vedanta near Aggeneys. This re­source is said to be one of the world’s largest un­de­vel­oped zinc de­posits, and there­fore holds tremen­dous po­ten­tial for long-term op­er­a­tions and job cre­ation.

Within the agri­cul­tural sec­tor, which con­sti­tutes slightly more than 9% of our port­fo­lio, we are fo­cused on in­creas­ing agro­pro­cess­ing ca­pac­ity.

This is be­ing driven by projects such as the Na­makwa ir­ri­ga­tion scheme, and the re­place­ment of age­ing vine­yards and aqua­cul­ture. This ties in with Agri-parks ini­tia­tives across var­i­ous dis­tricts in the prov­ince that aim to pro­mote pro­cess­ing and trans­for­ma­tion in the agri­cul­ture in­dus­try.

Uping­ton has been ear­marked as a spe­cial eco­nomic zone and one of the pos­si­ble sites for a pro­posed so­lar park. This will go a long way to un­lock­ing lo­cal­i­sa­tion opportunities in the re­new­able and agro­pro­cess­ing in­dus­tries.

Eco­nomic chal­lenges

The ef­fects of an eco­nomic down­turn are par­tic­u­larly acute in a smaller prov­ince with pre­dom­i­nantly pri­mary in­dus­tries and high un­em­ploy­ment.

The de­cline in com­mod­ity prices such as iron ore had a sig­nif­i­cant ef­fect on the min­ing in­dus­try in the North­ern Cape, which af­fected not only the min­ing com­pa­nies, but also its sup­pli­ers.

To keep up with the chal­leng­ing eco­nomic cli­mate and cre­ate much needed jobs, the prov­ince has to start de­vel­op­ing a sec­ondary in­dus­try through ben­e­fi­ci­a­tion and man­u­fac­tur­ing.

Di­ver­si­fy­ing the prov­ince’s in­vest­ments and plac­ing em­pha­sis on the re­new­able sec­tor has helped to mit­i­gate the neg­a­tive ef­fect of the global eco­nomic down­turn and slump in com­mod­ity prices, which would other­wise have crip­pled the prov­ince’s econ­omy.

The IDC as­sists com­pa­nies in dis­tress to en­able them to re­tain jobs and main­tain pro­duc­tive ca­pac­ity in the econ­omy.

We have seen a sim­i­lar ef­fect dur­ing the re­cent drought in the farm­ing in­dus­try. Other than the nor­mal distressed fund­ing of­fered by the IDC, we also availed drought re­lief ei­ther di­rectly or through the Land and Agri­cul­tural De­vel­op­ment Bank of SA to pro­duc­ers.

Re­new­able en­ergy is the way to go

The na­ture of the IDC’s in­volve­ment in the prov­ince is through large-scale projects that have a ma­jor ef­fect. This is ev­i­dent in the fund­ing ap­provals of R21.5 bil­lion in the past five years, re­sult­ing in close to 8 000 jobs be­ing cre­ated dur­ing this pe­riod. Th­ese ap­provals were largely in the re­new­able en­ergy in­dus­try, fol­lowed by min­ing and me­tals, as well as agro­pro­cess­ing and tourism.

The IDC has also been one of the largest fun­ders of gov­ern­ment’s Re­new­able En­ergy In­de­pen­dent Power Pro­ducer Pro­cure­ment Pro­gramme.

Of the R14.2 bil­lion we have com­mit­ted to this trans­for­ma­tive pro­gramme, R11.4 bil­lion has been di­rected to­wards projects in the North­ern Cape.

The re­new­able en­ergy pro­gramme has al­ready re­ceived recog­ni­tion far and wide as one of the coun­try’s most suc­cess­ful pub­lic-pri­vate part­ner­ship pro­grammes ded­i­cated to build­ing much-needed in­fra­struc­ture.

The North­ern Cape proudly takes cen­tre stage as one of the prime driv­ers of this suc­cess.

Some of the IDC-funded projects in­clude the Aben­goa Khi So­lar One con­cen­trated so­lar power farm near Uping­ton and the Kaka­mas Hy­dro Elec­tric Power project, which is har­ness­ing en­ergy from the wa­ter in the Or­ange River.

The IDC ac­knowl­edges that re­new­able en­ergy is a sec­tor on the rise and may just be the one de­mand­ing the most fund­ing in the near fu­ture.

It’s a huge in­jec­tion for this prov­ince and it is quite strate­gic for the coun­try’s en­ergy needs. With the num­ber of ap­provals for re­new­able en­er­gies in the prov­ince, it has moved the North­ern Cape to sec­ond in terms of IDC provin­cial ex­po­sure, only be­hind Gaut­eng.

The Aben­goa plant, with its 4 000 so­lar mir­rors, will gen­er­ate up to 50 megawatts of en­ergy, and the hy­dro project in Kaka­mas will pro­vide 10 megawatts.

When it comes to so­lar power projects in par­tic­u­lar, our ap­proach is unique com­pared with other fun­ders: we buy shares for com­mu­ni­ties close to th­ese projects.

Once in op­er­a­tion, th­ese so­lar power plants do not usu­ally em­ploy a lot of peo­ple, so, to off­set the lim­ited job opportunities, the IDC in­vested up to 20% in com­mu­nity trusts on be­half of the sur­round­ing com­mu­ni­ties. Once th­ese projects start gen­er­at­ing in­come, the div­i­dends will ben­e­fit th­ese com­mu­ni­ties.

An­other im­por­tant achieve­ment stem­ming from our in­volve­ment in this pro­gramme is that we have suc­cess­fully started to di­ver­sify the North­ern Cape’s econ­omy away from its strong min­ing bias.

Ben­e­fits for en­trepreneurs

The North­ern Cape as an un­der­de­vel­oped prov­ince of­fers many opportunities for en­trepreneurs who are will­ing to iden­tify and de­velop th­ese prospec­tive busi­nesses.

Th­ese opportunities are more pro­nounced down­stream of the agri­cul­ture, min­ing and re­new­able en­ergy value chains.

Di­ver­si­fy­ing the North­ern Cape econ­omy

We are proac­tively pur­su­ing opportunities through the es­tab­lish­ment of the In­ter­gov­ern­men­tal Agri­cul­ture Tech­ni­cal Fo­rum to de­velop 1 500 hectares of com­mu­nity-owned agri­cul­tural land. De­vel­op­ment fi­nance in­sti­tu­tions such as the IDC can be key play­ers in this ini­tia­tive. The en­vis­aged Kathu In­dus­trial Park, a joint de­vel­op­ment with An­glo Amer­i­can, seeks to lo­calise sup­plier de­vel­op­ment to the min­ing in­dus­try. It aims to act as a cat­a­lyst to pro­mote a di­ver­si­fied lo­cal econ­omy be­yond the life of a mine.

Em­pow­er­ment ini­tia­tives

One of our key over­rid­ing con­sid­er­a­tions in sup­port­ing in­dus­trial and eco­nomic de­vel­op­ment in South Africa has been to grow the num­ber of black, fe­male and youth en­trepreneurs.

The cor­po­ra­tion’s role in the de­vel­op­ment of th­ese en­trepreneurs re­mains para­mount, such as the pro­vi­sion of risk cap­i­tal. This is ev­i­dent in the IDC’s fund­ing of Kala­gadi Man­ganese, a mine based in Ho­tazel, which is partly owned and man­aged by a fe­male en­tre­pre­neur.

Dur­ing the 2015/16 fi­nan­cial year, the IDC ap­proved the pro­vi­sion of R360 mil­lion to youth-em­pow­ered busi­nesses; R711 mil­lion to BEE busi­nesses; and R150 mil­lion to black in­dus­tri­al­ists in the North­ern Cape alone.

Top tips for en­trepreneurs in the prov­ince

Take own­er­ship of the busi­ness plan­ning process. En­sure the ap­pli­ca­tion is com­plete (be­yond the busi­ness plan). Have knowl­edge of red tape and le­gal com­pli­ance re­quire­ments in the rel­e­vant in­dus­try.

Un­der­stand your in­dus­try (mar­ket, com­pe­ti­tion, busi­ness cy­cles).

Bring in part­ners to add skills, ex­pe­ri­ence and in­vest­ment, es­pe­cially for youth ap­pli­ca­tions.

UN­DER­GROUND PRIZE Kala­gadi Man­ganese sits on a vast re­serve of man­ganese de­posit

Mehmood Ahmed

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